By Megan Hart
Stocks suffered steep losses Wednesday on fears of a weakening global economy, but recovered from the worst declines by the close of trading.
The Dow Jones Industrial Average fell nearly 400 points during the session before recovering 281 points in a late day rally to close down 1.06 percent, or 173.45 points, at 16,141.45. The NASDAQ Composite Index fell 12 points, or 0.3 percent to close at 4,215.32, while the Standard & Poor’s 500 Index dropped 15 points, or 0.8 percent to close at 1,862.49.
The bond market climbed, sending interest rates on the benchmark 10-year Treasury note below 2 percent for the first time since June 2013, before recovering to 2.09 percent by the market’s close. Bond prices have risen sharply in recent days as investors sought a safe haven from declining stocks.
Retail sales fell a larger-than-expected 0.3 percent in September, the Commerce Department reported, while September’s producer price index unexpectedly declined. Both reports added to worries about the strength of the U.S. economy amid growing signs of weakness in Europe and China.
“Today’s data is a disappointment and couldn’t come at a worse time for financial markets,” Mesirow Financial’s Chief Economist Diane Swonk wrote in a research note. “Fear of everything from weakness in Europe to terrorism and ISIS to the spread of Ebola has added to volatility.”
Shares of the top four U.S. airlines plummeted by more than 4 percent in early afternoon trading after the Center for Disease Control reported that a second health care worker had flown round trip between Dallas and Cleveland after contracting the Ebola virus from a patient she treated in Dallas.
By closing bell, shares of the airlines had rebounded some, with Delta finishing down 41 cents, or 1.25 percent to $32.38; United Continental down 62 cents, or 1.44 percent, to $43.55. American Airlines rose 18 cents, or 0.57 percent, to $31.69 and Southwest Airlines rose 2 cents, or less than 1 percent, to $30.02.
October has been a volatile month for the stock market, with 100-point daily swings for the Dow in seven of 11 trading days. That’s reflected in the Chicago Board of Options Exchange’s volatility index, which surged over 15 percent Wednesday to 26.25, the highest level since June 2012.
The economies of both Europe and China have struggled in recent weeks. Last week, the International Monetary Fund revised its world growth outlook downward for 2014 to 3.3 percent, 0.4 percentage points lower than was forecast in April. On Tuesday, Germany its growth expectations for this year and next.
KeyCorp had among the sharpest declines in stock prices on Wednesday. Shares fell 6 percent after the company reported a 23 percent drop in profits for the third quarter.
The day’s biggest winner was Southwestern Energy, which rose by 4 percent after Bank of America analysts upgraded the company’s shares.